Deloitte South Island Index undergoes record quarterly decline to end 2016

South Island listed firms market capitalisation tumbles 5.2% in the quarter to 31 December 2016

The Deloitte South Island Index has undergone its largest quarterly decline, in both dollar value and percentage terms, since the inception of the Index in December 2007.

South Island listed firms collectively tumbled $1,018.6 million (5.2%) in market capitalisation in the quarter ended 31 December 2016.

Scott McClay, a corporate finance partner in Deloitte’s Christchurch office, says that the record quarterly decline comes after the Index reached a record peak in the previous quarter ending 30 September 2016.

“Similar to the weather conditions over the summer, the last quarter of the year was not as great as anticipated for South Island listed companies in terms of share price performance. It is likely that the impact of global events occurring early in the quarter had a detrimental flow-on effect despite some solid results being announced by the Mainland companies,” says Mr McClay.

“This is one of the times where stock market activity does not correlate to the actual financial performance of the companies. It is an indicator of investors taking a wider view rather than simply the individual company’s performance. This marks a change in conditions for South Island companies but they remain resilient,” he adds.

The Deloitte South Island Index’ 5.2% quarterly decline was a better performance than the S&P/NZX 50 Capital Index, which fell 7.0% in the quarter to 31 December 2016. However, both the ASX All Ords and the Dow Jones outperformed the South Island Index growing 3.5% and 7.9% respectively during the quarter.

The Index’ top performer for the quarter, in both dollar value and percentage terms, was Arvida Group which grew by $89.6 million (27.0%) in market capitalisation during the quarter to 31 December 2016. During the quarter, Arvida Group released its interim results for the six months to 30 September, which included increases in both revenue and underlying profit on the corresponding period from the prior year.

The remaining top performers for the quarter to 31 December 2016 include Pacific Edge (up $49.6 million (28.2%) in market capitalisation), Scales Corporation (up $30.7 million (6.8%) in market capitalisation), Skellerup Holdings (up $29.0 million (11.0%) in market capitalisation) and Synlait Milk (up $26.6 million (5.0%) in market capitalisation).

The three most significant declines for the quarter came from three of the four largest companies on the Index. Ryman Healthcare, EBOS Group and Skyline Enterprises saw their market capitalisations drop $760.0 million (15.8%), 326.6 million (11.4%) and $102.1 million (12.0%) respectively.

Only two of the seven sectors posted positive movement with Biotechnology (up 16.9%) and Primary (up 1.5%) achieving growth in the quarter to 31 December 2016.

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